Which of the Following Statements Regarding Capital and Profits Interests

question 130

Multiple Choice

Which of the following statements regarding capital and profits interests received for services contributed to a partnership is false?

• A)The holding period of a capital or profits interest begins on the date the interest is received.
• B)Partners receiving capital interests must recognize the liquidation value of their capital interests as capital gain.
• C)Partners receiving only profits interests generally don't recognize income when the profits interest is received.
• D)Partners receiving only profits interests include their share of partnership debt in the tax basis of their partnership interest.

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Definitions:

Total Revenue

The total amount of money a firm receives from sales of its goods or services, calculated as the price per unit times the number of units sold.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.

Market Period

A very short duration in economics during which the supply of a good is fixed and cannot be adjusted in response to changes in demand.

Long Run

The long run is a period of time in economics where all inputs and factors of production can be varied, allowing companies to adjust all their resources.